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Nestlé expects stratospheric growth from India operation

By RJ Whitehead

- Last updated on GMT

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Nestlé expects stratospheric growth from India operation
Nestlé’s regional head has revealed that he expects India to be one of the company’s top five markets by 2020.

Speaking to Livemint, Nandu Nandkishore, who heads up the Swiss firm’s Africa, Oceania and Asia zone, said India currently contributes less than 2% to the overall balance sheet, but will quickly grow to an anticipated fourth place in the company’s standings by the end of the decade.

To achieve this growth, he said that investment in R&D and staff will play a big part in its strategy: “We invest in R&D directly and we invest in people. We identify high potential resources and send them overseas and, at the same time, we bring expats in the Indian market​.”

Serious investment

This is an extension of current policy which, along with investment in capacity, saw Nestlé India receive approvals from shareholders for investments worth Rs10bn (US$184m) last year.

We have invested directly in India in a research and development centre in Manesar [in November], where we invested Rs2.8bn (US$515m). It is a global R&D centre and for India as well​,” he said.

The company has been studying and “coming to terms with​” the rate of trading among consumers, with Nandkishore admitting it had “been a bit of an eye-opener​” to see how fast consumers in the emerging markets are willing to pay a higher price for better quality products. This, he added, will open the door for Nestlé to bring in premium products, as it has done in more developed markets.

Lagging behind

To expand these premium product lines, the company will evaluate each category before bringing in the necessary technology to deliver them to the Indian market. This, though, is an area where Nestlé has so far been behind the game. 

We have been late in introducing [premium products and categories] to India. But as part of our focus on India, we will be making available a lot of these advanced technologies… to tackle this premium opportunity, which is huge​.”

Another area where Nestlé has been late to the table concerns the burgeoning Western breakfast market, which has been difficult for the company given India’s preference for hot breakfasts and Nestlé’s range of cold-milk products. 

But on the whole Nandkishore is satisfied with the results he has seen in spite of late arrivals and India’s punishing inflation rate.

We are growing, we are growing well and can grow better and faster, and there is a whole segment of opportunity in the premium segment that we have missed and will now focus on​,” he concluded.

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